Formation LLC – An Alternative Business Organization

2007-03-08 10:33:40

( Business )



When you are contemplating company formation, you may want to consider formation LLC. A limited liability company (LLC) is neither a partnership nor a corporation; it is a distinct type of business organization that gives you the advantages of limited liability in a corporation combined with the advantage of pass-through taxation in a partnership.

Formation LLC involves more paperwork than would be required of a general partnership. But you can do these things yourself if you have the time. In fact, online company formation services are offered by most states through the websites of the respective secretaries of state. As in forming a corporation, the applications for limited company formations are handled by the secretary of state.

You should know that the new company formation process actually starts with you choosing a name for your company and having the proposed name cleared for use by the secretary of state. You should also choose the type of business entity you want to adopt, whether the company will be a regular or S corporation or a limited liability company.

If you need more information about the advantages to you of each option, you should consult an attorney or an accountant. One distinct benefit from choosing formation LLC is that income will be taxed only once.

The income derived from LLC operations is not taxed; it is distributed to the owners who pay taxes when they file personal income tax returns. In a corporation, corporate income is taxed; when dividends are declared and distributed, the shareholders again pay their respective income taxes on dividends.

If you cannot spare the time attending to the tedious details, you can engage the services of a company formation agent. These professional providers will prepare all documents for you and follow up your formation LLC documents through the process until final approval.


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